Accounting for growth in the USSR and Russia, 1950–2012

Why did the Soviet economy slowdown in last decades before its collapse? How did the proximate sources of economic growth of Russia change after the transition from a planned to a market economy? Previous research has suggested inputs‐driven growth before the transition and total factor productivity (TFP) as its main driver afterwards. This paper presents a new growth accounting exercise for Russia and Russian industry, using new historical statistics and Russia KLEMS data for capital, the historical series of Russian gross domestic product (GDP) from the Hitotsubashi Asian Historical Statistics Project, and alternative measures of capital inputs. In contrast with previous studies, this paper shows that in Russia TFP was the main determinant of labor productivity performance before and after the transition. The contribution of capital intensity was relatively stable in both periods. For Russian industry, the difference between the planned and market economy periods appears in the impact of capital quality. Before the transition, growth structures overbore machinery, deteriorating capital quality and labor productivity growth, while in 1999–2008, the dominating contribution of machinery fueled growth. Finally, the paper shows that the transformational recession of 1990s can be partially explained by the fall of capital services.